Trade Receipt by branch in India on behalf of Foreign Head Office

[Bakul Gandhi]

A foreign company undertook consultancy work for a Govt Company. It then opened a branch office i India and obtained PAN. The Govt company made payment to Indian branch in Rupees and deducted tax at source.  Is this in compliance of FEMA/RBI guidelines?

 

AI Summary

Foreign Company Receiving INR at Indian Branch Not Required to Comply with RBI/FEMA Guidelines, Says Chartered Accountant. A foreign company completed consultancy work for a government company and subsequently opened a branch office in India, acquiring a Permanent Account Number (PAN). The government company paid the Indian branch in Indian Rupees and deducted tax at source. The query raised concerns about whether this transaction complies with FEMA/RBI guidelines. A response from a chartered accountant indicated that receiving payment in Indian Rupees at the Indian branch does not require compliance with RBI/FEMA regulations.